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Rising Debt for Canada & Canadians

Olu Olu
Sep 12
2 min read

According to the Fraser Institute, if Canadian families spent and borrowed like the federal government, they would be $427,759 in debt. Canada’s national debt has been climbing steadily, and it’s something that affects everyone — not just the government or financial experts. But what does this really mean for regular folks like you and me? Let’s break it down in simple, straightforward terms.

What Is Canada’s Debt?

When Canada’s government spends more money than it collects in taxes and other revenues, it borrows to cover the difference — this borrowed money is called the national debt. Think of it like a household using a credit card to pay for things when their paycheck isn't enough.

Why Is Canada’s Debt Increasing?

Several factors are driving this rise, including:

Pandemic relief spending: Extra funds to support people and businesses during COVID-19. The pandemic might be over but the bills and costs are far from settled. Some unpaid loans/expenses may also worsen due to compound interest.
Healthcare and social programs: An aging population means more demand on government services. As seen in the image below, grants and social benefits constitute the highest national spend. (see the image below form Statistics Canada)
Infrastructure and investment: Building roads, hospitals, and climate initiatives costs money. PM Mark Carney is also embarking on many projects to allay the effects of US tariffs.

How Does This Impact You and I?

Higher Taxes or Reduced Services: To pay off the debt or the interest on that debt, governments may need more revenue. This could lead to higher taxes or reduced funding for programs we rely on—like healthcare, education, or public transit.
Interest Payments Drain Public Funds: Every year, a bigger portion of our tax dollars goes to paying interest on the debt instead of things that benefit citizens. This means less money available for new projects or improvements.
Economic Growth Could Slow: A heavy debt load can make it harder for Canada to invest in growth opportunities, potentially slowing job creation or wage increases.
Inflation and Borrowing Costs: The government borrowing more can push interest rates up, making mortgages, loans, and credit more expensive for individuals and businesses.

What Can You Do?

Stay Informed: Understanding how government debt affects the economy helps in making better financial and voting decisions.
Manage Your Finances Carefully: Be mindful of your own debt and expenses as interest rates fluctuate.
Engage Civically: Hold representatives accountable for responsible fiscal policies that balance support and sustainability.

Bottom Line

Canada’s rising debt isn’t just a number in a report—it can influence taxes, services, interest rates, and the overall economy. While it’s a complex issue, keeping it on your radar empowers you to protect your financial wellbeing and participate in shaping our country’s future.

Need help developing a debt repayment strategy or optimizing your credit profile? Let’s talk. I help clients across Canada build sustainable financial plans rooted in clarity and confidence.